Budget 2019: Leo Varadkar confirms cuts in USC and income tax

Taoiseach Leo Varadkar has dismissed any suggestion that Tuesday's budget will be an election budget, despite the fact it will contain cuts in USC and in income tax for middle-income earners.

Mr Varadkar pointed out that Budget 2019 would be the first balanced budget in a decade, with revenue equalling expenditure. He said the budget was aimed at reducing the national deficit.

“If it were an election budget we would probably be running a massive deficit, which we don’t do,” he said.

Mr Varadkar was speaking to reporters in advance of the Fine Gael presidential dinner in Dublin on Saturday night.

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Outlining his rationale for the budget, he said it was important that it be balanced so that it was “Brexit-proofed” and allowed for a “rainy day fund” for any potential shocks in the future.

He confirmed that there would be cuts in the USC and in income tax, and he also said the social welfare and pension package would reverse the cuts made in those areas over the past decade. He also said there would be a 25 per cent increase in capital spending next year.

Asked if Budget 2019 was an election budget, he said: “I would see this budget as not an election budget [but] one that is very much in line with our budgetary and economic strategy of the last couple of years, [which is] reducing the deficit and reversing the cutbacks that have been made.”

During the course of his speech at the dinner later, Mr Varadkar also attacked the economic policies of Sinn Féin.

“That is what makes me so concerned about the economic policies of Sinn Féin and many other Opposition parties – proposing to increase borrowing when we should be reducing debt, making no provision for a rainy day with Brexit around the corner.”

Tax windfall

Mr Varadkar gave a cautious response to reports of a windfall from taxes, including the predicted boost from higher-than-expected corporation tax receipts this year.

“Corporation tax looks like it will be very buoyant this year. A lot of that will not recur next year. That is why we are being very careful.

“We can’t make plans for long-term spending on the basis of one-off tax receipts from corporation tax.”

He continued: “I am determined on this occasion not to repeat the mistakes of the past and not to assume that buoyant tax revenues will necessarily happen again in future.”

Asked about Brexit, he referred to comments on Saturday by European Commission president Jean-Claude Juncker, who said he was confident about a deal between the EU and the UK.

Mr Varadkar said the EU summit the week after next would be important and added: “I would be hopeful . . . there would be some decisive progress by November.”

He defended his inclusion in his speech on Saturday of a description of Fine Gael as being the united Ireland party, against a suggestion that now was not an ideal time to be asserting that aim.

He said that description was in the party’s title, adding that the party’s ambitions needed to be looked at in the round, where it wanted to unite the country not simply in a territorial sense.

“We fully support the principle of consent, and the Good Friday Agreement,” he added.